Multi-Insured Patients: Understanding Coordination Of Benefits

A patient with more than one insurance plan is considered to have dual health insurance coverage. This means that one insurance plan is primary, and the other is secondary. The primary insurance plan covers the patient's medical expenses first, up to its coverage limits, and the secondary insurance plan covers the remaining costs, also up to its coverage limits. The total amount paid by both plans will never exceed 100% of the medical costs.

Primary and secondary insurance

When a patient has more than one insurance policy, the policies are referred to as either primary or secondary insurance. The primary insurance is responsible for paying first on any claims. The secondary insurance comes into play only if the primary insurance policy is unable to cover the entire claim.

The primary insurance payer is the insurance company responsible for paying the claim first. When you receive health care services, the primary payer pays your medical bills up to the coverage limits. The secondary payer then reviews the remaining bill and picks up its portion. Coordination of benefits rules determine which of your insurance companies is the primary payer.

In the case of Medicare, if it is your primary insurance, your secondary insurance may pay for some or all of the 20% coinsurance for Part B-covered services. If your primary insurance denies coverage, secondary insurance may or may not pay some part of the cost, depending on the insurance. If you do not have primary insurance, your secondary insurance may make little or no payment for your health care costs.

There are several benefits to having dual health insurance coverage. For example, you may have more coverage options when you carry two plans, which means your costs could be reduced. In some situations, having two health insurance plans can reduce your out-of-pocket costs. However, in other cases, the added premium payment and deductible might increase your overall health expenses and cause further complications.

There are also some drawbacks to having dual health insurance coverage. For example, you will still be responsible for two monthly premiums and two deductibles. You may also need to navigate additional policies and the reimbursement process may take longer or be more mistake-prone.

Coordination of benefits

When a person has more than one health insurance plan, the insurance companies use a process called "Coordination of Benefits" (COB) to decide which plan will pay first and how much the second plan will pay. This process helps avoid duplicate payments and determines which plan is primary and which is secondary.

The primary insurance plan is the one that pays first, up to its coverage limits. The secondary insurance plan then covers some or all of the remaining costs that the primary plan doesn't pay. This ensures that the patient receives the maximum coverage available and that the insurance companies pay their fair share without overlapping.

The order of payment is usually determined by the "birthday rule", where the plan of the parent whose birthday comes first in the calendar year is considered primary. For married couples, the plan of the spouse whose birthday comes first is typically primary. If the patient has their own insurance plan and is also covered by their spouse's plan, their own plan is usually the primary payer.

Having multiple health insurance plans can provide benefits such as increased coverage, reduced out-of-pocket costs, and the ability to fill coverage gaps. However, it can also lead to higher costs due to multiple premiums and deductibles, increased paperwork, and potential coverage overlap. It is important for individuals to carefully consider their specific needs and compare plan costs and benefits before deciding to obtain multiple health insurance plans.

Pros and cons of dual insurance

Pros of Dual Insurance:

Having two health insurance plans can be a strategic decision or the result of various circumstances. Here are some of the advantages:

• More widespread coverage: Multiple health plans will give you more comprehensive coverage. You can choose the second and any subsequent policies based on what is not covered in the first policy, such as critical illness cover or maternity cover.
• More effective premiums: When you invest in multiple health policies with smaller covers instead of one plan with big coverage, you are likely to have lower premium amounts.
• Coverage for more specific conditions: With multiple policies, you have the option to cover more illnesses. For example, by having one generic policy and one specific policy, you can cover both basic hospitalization and treatments, as well as critical conditions through a Critical Illness Policy.
• More efficient policy management: When you have multiple policies, you will be able to decide which one to make a claim against, allowing you to keep one policy undisturbed and earn a No Claim Bonus or Cumulative Bonus for a claim-free year.
• Protection against claim rejection: If a claim is rejected by one insurer, it may be accepted by another.
• Further tax benefits: Having multiple health insurance plans will also result in additional tax benefits.
• Reduced coverage gaps: If one of your health insurance policies lapses, you will not have a gap in your coverage as your second health insurance plan will automatically take effect.
• Lower extra costs: If you frequently pay medical expenses out-of-pocket because your current plan doesn't cover enough, a second health insurance plan can be beneficial.
• Peace of mind: Dual insurance provides a backstop for employees who lose their jobs. Without it, they could be left without any coverage.

Cons of Dual Insurance:

There are also some drawbacks and challenges to dual insurance:

• Out-of-pocket costs: Even with dual insurance, you will still be responsible for out-of-pocket expenses, including copays, coinsurance, and other costs.
• Double the fixed costs: Two health insurance plans mean paying two premiums and deductibles, resulting in greater monthly and out-of-pocket costs.
• Potential for coverage overlap: If the two plans are too similar, you may not get many additional benefits.
• Complications with billing: Doctors may only want to bill a single policy, which can make the process more complicated.
• Navigating additional policies: You will need to navigate separate policies and rules, and the reimbursement process may take longer or be more prone to errors.
• Challenges with coordination of benefits: The coordination of benefits between two plans and carriers can be complicated and messy, especially if one plan is a PPO and the other is an HMO, or if the insured is also eligible for Medicare.

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Determining primary insurance

When a patient has more than one insurance policy, one is considered the primary insurance, and the other is deemed secondary. The primary insurance is responsible for paying first on any claims, and the secondary insurance covers the remaining costs.

Determining which insurance is primary and which is secondary is done through a process called "Coordination of Benefits" (COB). COB rules decide which insurance pays first, reducing the duplication of benefits and increasing the efficiency of claims processing. The primary insurance will pay up to its coverage limits, and the secondary insurance will pay whatever is left over, up to 100% of the total bill.

The patient or their guardian can designate which insurance is primary and which is secondary using a coordination of benefits form. If the patient has multiple insurance plans, they should be asked which one is primary and which is secondary. If the patient is unsure, this can be clarified by calling each insurance company to verify.

In the case of minors and young adults covered under their parents' insurance plans, the "birthday rule" is often used to determine which plan is primary and which is secondary. The parent whose birthday falls first in the year (month and day) has the primary insurance plan, and the other parent's insurance provides secondary coverage. If the parents share a birthday, the plan that has been active longer is considered the primary plan.

If the parents are divorced, there may be a court order that determines which insurance plan is primary. If there is no court order, the birthday rule applies. If one parent is covered under COBRA, the other insurance plan will always be the primary plan.

For young adults (under 26) who are married and covered by both a parent and a spouse, the plan that has been effective longer is usually the primary plan. However, if the young adult has their health plan through their employer, that coverage becomes the primary plan, and the parent/spouse's coverage is secondary.

In most cases, if an individual has their own insurance plan through their employer, that plan is considered the primary insurance. If they are also covered by their spouse's insurance plan, the spouse's plan is usually secondary.

It is important to note that having two health insurance plans does not necessarily mean that the patient will be fully covered twice. The combined coverage of both plans cannot exceed 100% of the patient's out-of-pocket costs. Additionally, the patient may be responsible for paying two sets of premiums and deductibles, which can result in higher overall costs.

Billing process for dual insurance

Having dual insurance can be beneficial in some cases, but it can also lead to complications with billing. When a patient has dual insurance, they have primary and secondary insurance. The primary insurance is responsible for paying first, and the secondary insurance comes into play if the primary insurance is unable to cover the entire claim.

The billing process for dual insurance typically involves the following steps:

Collecting Patient Information:

When billing for a patient with dual insurance, it is important to collect up-to-date and accurate demographic information, including the patient's name, birthdate, and insurance plan subscription information for both the primary and secondary insurance plans.

Checking Eligibility and Verifying Insurance:

The next step is to check the eligibility and verify the insurance coverage for each plan. If neither plan is clearly indicated as primary, it is important to contact the patient to clarify the coordination of benefits (COB) and confirm which plan is primary. The COB determines the order of payment and ensures that both plans do not pay more than 100% of the total bill.

Submitting the Claim to Primary Insurance:

Once the primary insurance plan is identified, the claim can be submitted to them. This involves sending the relevant medical information and billing details to the primary insurer for processing.

Noting the Payment and Adjustments:

After the primary insurance processes the claim, note the allowable amount, the patient's responsibility, and any adjustments made by the primary insurer. This information will be important for the next step of billing the secondary insurance.

Submitting the Claim to Secondary Insurance:

The secondary insurance claim can be submitted after receiving payment and remittance information from the primary insurer. It is important to include the original claim amount, the amount paid by the primary insurer, and the reasons for any remaining balance. This information helps avoid a claim denial from the secondary insurer, as they will want to see why the primary insurer did not cover the full amount.

Forwarding the Remaining Balance to the Patient:

Once the secondary insurance pays their portion of the claim, any remaining balance after both insurances have paid is forwarded to the patient to cover.

It is important to note that having dual insurance does not necessarily mean the patient will be fully covered for all expenses. The patient may still have out-of-pocket costs, and they may be responsible for paying two premiums and two deductibles. Additionally, billing for dual insurance can be complex, and it is crucial to follow the correct procedures to avoid claim denials and delays.

Frequently asked questions